European Single Market

Involves all 28 members of the European Union and is the basis on which the EU operates, allowing free movement of goods, services, capital and people between member nations.

Goal:

To create a borderless Europe to facilitate trade to create a zone of shared prosperity, free of strident nationalism.

Current status:

Following the Brexit vote in the United Kingdom, which is likely to see the UK leave the single market at the end of two years of Brexit negotiations, EU member states have declared their intention to maintain and strengthen the Single Market. But risks remain from growing opposition to open borders within the EU. Forthcoming elections in France, Italy and the Netherlands will pose challenges.

Negotiations commenced in November 2012, originally with the limited aim of creating an umbrella agreement for existing agreements.

Goal:

Originally proposed to be an agreement covering trade in goods, services, investment and economic and technical co-operation.

Current status:

Best hope for a major multilateral trade agreement in the Trump era.

China has increasingly been asserting its influence within RCEP, promoting it as an alternative to the Trans Pacific Partnership. With the US withdrawing from the TPP and effectively ending it, China is lobbying for RCEP to be a substitute for the TPP, which could make it the main vehicle for China to advance its economic and strategic influence compared to the US.

TPP (Trans Pacific Partnership)

Negotiations commenced in January 2008. Agreement signed in February 2016.

Goal:

To remove barriers to trade in all markets and to introduce rules for liberalising intellectual property rights.

Current status:

President Trump has withdrawn the US from the TPP. Other members are trying to salvage a “12 minus one” agreement, but major players such as Japan say they see no point in an agreement which does not include the US. TPP appears dead on arrival.

TTIP (Trans Atlantic Trade and Investment Agreement)

A proposed free trade area covering the European Union and the United States, estimated to be worth €120 billion to the EU and $90bn to the US, an estimated 50 per cent increase in total EU-US trade.

Negotiations commenced in February 2013. Negotiations are conducted in secret.

Goal:

To increase market access, to streamline regulations and to provide clear rules to allow greater sharing of intellectual property.

Current status:

Negotiations are proceeding but are almost certain to be suspended indefinitely in light of the Trump administration’s hostility to multilateralism and towards the EU itself.

EU-China investment agreement

To cover economic relations between China and all European Union countries, estimated to be worth €1bn a day in trade, investment and other service industries such as tourism and education (China is now the EU’s biggest trading partner).

Negotiations commenced in January 2014.

Goal:

To remove barriers and to establish clear rules for facilitating a deeper economic relationship and to lay foundations for a full bilateral free trade agreement (FTA).

Current status:

Negotiations on an investment agreement are continuing. Once completed, negotiations on a full FTA are expected to commence. May have better prospects of success in light of China’s aim to become a lead power promoting free trade and multilateralism.

NAFTA (North American Free Trade Agreement)

An agreement between the United States, Canada and Mexico.

Came into force in 1994, amid predictions of huge economic benefits for all three countries.

Goal:

To eliminate barriers to trade and investment in the north American nations.

Current status:

In serious jeopardy. President Trump has ordered a review of NAFTA and is highly critical of it as “unfair” to the United States. Before Trump, NAFTA was generally seen as having delivered less than promised. Blamed in the US for allowing the exporting of American manufacturing jobs to Mexico. Criticised in Canada for giving big American corporations excessive powers.

CETA (Comprehensive Economic and Trade Agreement)

A free trade agreement between the European Union and Canada.

Goal:

To remove 98 per cent of trade barriers between the EU and Canada.

EU claims it will lead to savings of over €500m a year in taxes on exports to Canada, plus greatly increased market access for both countries.

Negotiations commenced in May 2009. The deal was signed by Canada in October 2016. It now has to be ratified by all EU member states.

Current status:

In the wake of President Trump’s push against NAFTA and multilateral trade agreements, the EU and Canada can be expected to increase their resolve to make CETA a success. Will come into operation once EU ratification process in completed.

EEAA (European Economic Area Agreement)

An access to the single market agreement involving 28 EU member states and three non-EU countries (Norway, Iceland and Liechtenstein).

Came into effect in 1994.

Goal:

To allow countries neighbouring the EU to trade and gain access to the benefits of the single market without becoming full EU members.

Current status:

Allows the free movement of goods, services, capital and people between the European single market and the non-EU states.

Seen by the some analysts in the United Kingdom as a possible model for a similar agreement between the UK and the EU post-Brexit. But the UK government’s decision to go for a “hard Brexit” means the UK will leave the single market and will seek a separate Free Trade Agreement with the EU.

Other US Trade Agreements

The US currently has 14 FTAs with 20 countries: A Latin American agreement covering six countries, a South American agreement covering six countries, a Middle East agreement covering five countries and bilateral trade agreements with Australia, South Korea and Singapore.

Goal:

Various

Current status:

More than 47 per cent of US exports go to these countries. The Trump administration has indicated all trade agreements will be reviewed to assess whether they disadvantage the United States.

New US FTA priorities

The Trump administration has signalled that it wants to replace multilateral and regional free trade agreements with bilateral agreements that maximise value to the US. Trump has listed the UK and Japan as top of the list for bilateral trade deals. He has also indicated an intention to renegotiate bilateral FTA’s with Australia and South Korea.

News Bites

May to hold talks with Merkel in Berlin
Theresa May is due to hold talks with German Chancellor Angela Merkel as she seeks to make progress on negotiating Brexit. The PM will travel to Berlin for the meeting at the Chancellery. It comes a day ahead of a speech on Saturday in which she is expected to set out the “security partnership” she wants to maintain with the EU. The UK is under pressure to reveal more detail about the final relationship it wants with the EU. Mrs May and her ministers are setting out what has been dubbed “the road to Brexit” in a series of speeches. BBC news, February 16

UK aims to keep financial rules close to EU
The UK is ready to set out its vision for how it wants financial services to operate after Brexit and favours an ambitious “mutual recognition” of regulations to preserve the City of London’s access to the EU. Under Britain’s proposal, the UK and the EU would recognise each other’s regulatory and supervisory regimes and would have aligned rules at the point of Brexit, with a mechanism that would monitor any divergence. Three senior figures briefed on Brexit discussions in the cabinet said that the government will back the proposal, which is also favoured by Mark Carney, the Bank of England governor. Financial Times, February 16

Business leader warns May against harsh immigration policy
British companies are facing a recruitment crisis, with labour shortages hitting critical levels in some sectors, according to a business leader who has urged the government to produce details on a post-Brexit immigration system. Adam Marshall, the director general of the British Chambers of Commerce, said the lack of candidates for some jobs was biting hard, and he warned ministers against bringing forward a “draconian and damaging” visa or work permit system. Surveys by the BCC showed that nearly three-quarters of firms trying to recruit had been experiencing difficulties “at or near the highest levels since [BCC] records began over 25 years ago”, he said. The Guardian, February 16

Lecturers want ‘radical’ tuition fee review
University staff are calling for a “radical” overhaul of tuition fees and higher education funding in England in a review of student finance. Sally Hunt, leader of the University and College Union, says the review must be more than “tinkering at the edges”. The review, expected to be formally announced in the near future, follows a promise by the prime minister to examine the cost of university. Theresa May said the review would show “we have listened and we have learned”. Ms Hunt, whose members are threatening strike action next week in a pensions dispute, says there needs to be a “fundamental look at university funding”. BBC news, February 16

Shampoo ‘as bad a health risk as car fumes’
Shampoo, oven cleaner, deodorant and other household products are as significant a source of the most dangerous form of air pollution as cars, research has found. Scientists studying air pollution in Los Angeles found that up to half of particles known as volatile organic compounds (VOCs) came from domestic products, which also include paint, pesticides, bleach and perfumes. These compounds degrade into particles known as PM2.5, which cause respiratory problems and are implicated in 29,000 premature deaths each year in the UK. Traffic had been assumed to be the biggest source of air pollution. The new findings, published in the journal Science, led to warnings that countries may struggle to hit pollution targets, with most tackling vehicle emissions. The Times, February 16

US rejects China bid for Chicago Stock Exchange
The US has rejected a proposed merger between the Chicago Stock Exchange and a Chinese-linked investor group. The decision comes after more than two years of reviews by officials. The tie-up was initially approved by the Committee on Foreign Investment in the United States, pending further approval by the Securities and Exchange Commission (SEC). But US politicians, including President Trump, have said letting a Chinese firm invest in a US exchange was a bad idea. Under the proposal, the Chinese-led North America Casin Holdings group would have bought a minority share of the privately owned Chicago Stock Exchange. BBC news, February 16

Labour gets 16,000 emails in five days urging it to consult on Brexit
More than 16,000 people have emailed Labour over the past five days, urging the party to consult members on Brexit after MPs said the topic was being ignored by its most senior policy body. The emails from party members will be examined by the party’s national policy forum (NPF), which meets this weekend in Leeds, and whose members include the shadow cabinet and trade union leaders. Labour has set up eight policy commissions since last year’s general election, to consult members and develop policy, but none focus on Brexit. The party has said Brexit is covered under the international policy commission, involving Keir Starmer, the shadow Brexit secretary, but that commission is not at the moment accepting submissions on Brexit. The Guardian, February 15